Report on Alternative Outcome Measures: Temporary Assistance for Needy Families (TANF) Block Grant . Assessment of the Change in Participation Requirements Under JOBS and TANF


While the previous sections of this paper described how participation is measured under the JOBS and TANF programs, the paper concludes by discussing factors that may influence a states ability to achieve the required participation rates and provides an assessment of how the participation requirements changed under the two programs.

An important factor in a states ability to achieve the expected level of participation is the economy. Increases or decreases in the unemployment rate can affect welfare caseloads by increasing or decreasing the need for cash assistance. This in turn affects the number of individuals states will have to involve in activities to meet the minimum participation requirements. When the economy declines, welfare caseloads tend to increase (Blank, 1997). This occurred after the passage of the Family Support Act in 1988. In part due to an economic recession, the number of families on welfare grew by 38 percent  from 3.7 million in 1988 to 5.1 million 1994. As caseloads increased, states had to involve more individuals in work activities to meet the required participation rates.

In contrast, the TANF statute passed in the midst of an economic recovery and the strong economy has played at least a partial role in the recent decline in welfare caseloads (Council of Economic Advisors, 1997 and 1999). As of March 1999, 2.7 million families were receiving TANF assistance. As a result of this decline, states have been required to involve fewer individuals in work activities to meet the participation requirements than they would have if caseloads had been higher. If economic conditions worsen and welfare caseloads increase, states may face greater challenges in future years when the target rates are higher and the caseload reduction credit is smaller.

Another way the economy can affect a states ability to achieve participation rates is the availability of jobs in the labor market  particularly when work counts as an activity as it does under TANF. A lack of unsubsidized jobs suitable for individuals leaving welfare will require states and localities to develop more program-based options (such as work experience positions) or to involve individuals in job skills training options in order to meet participation rates. This can increase program costs and place more demands on program managers and line staff. Another related issue is the lack of unskilled jobs in some local economies. In this case, jobs may be available but they may not be in the low-skilled labor market in which most welfare recipients find jobs.

A second factor that can affect the ability of states to meet minimum participation requirements is the composition of the welfare caseload  particularly the proportion of the caseload defined as "hard-to-serve". Welfare recipients with more employment barriers  such as low employment skills, limited work experience, and/or problems with domestic violence and substance abuse  may have more difficulty sustaining participation in program activities. States with a higher proportion of these types of individuals in their caseload have greater difficulty meeting participation requirements. Interestingly, because of the dramatic caseload decline experienced recently, it appears that the most employable recipients have found jobs and that those remaining on the caseload have more barriers to employment. This result may mitigate somewhat the positive effect that falling caseloads have on a states ability to achieve the minimum participation rates.

A third factor affecting the ability of states to meet the required participation rates is the availability of support services  particularly child care and transportation. Studies of welfare-to-work programs have found that problems in providing child care resulted in lower participation levels (Hamilton and Scrivener, 1999). Child care problems can result from a shortage of slots (or from a shortage of certain types of slots such as infant care or care during non-traditional or irregular hours), from inadequate resources to provide child care subsidies, and from unreliable arrangements with no backup options. Similarly, assistance in obtaining reliable transportation is also necessary if individuals are to participate in activities on a regular basis  particularly in areas with limited public transportation.

Finally, policies that encourage work by making work pay  such as earnings disregards  can increase the ability of states to achieve participation rates when works counts toward the requirement. These financial incentives encourage work by allowing workers to remain on welfare after their earnings would otherwise have exceeded eligibility limits. However, states with low grant levels may have more difficulty in meeting participation rates  particularly when work counts toward the rate. In states with low monthly assistance grants (and without generous income disregards), any job that meets the hourly threshold for participation is likely to make a worker ineligible for assistance.

In addition, some types of program approaches may enhance the ability of states to achieve participation rates. Research has shown that programs that emphasize skill development can result in higher participation rates, largely because activities are more seamless (Hamilton and Scrivener, 1999). When people move from one activity to another in a welfare-to-work program, the "in-between" periods can cause monthly participation rates to drop. Because education and training activities tend to be longer-term than job readiness and job search activities, programs that incorporate these activities more extensively may be able to achieve higher monthly participation rates more easily.

Overall, compared to the JOBS program, the TANF program has resulted in a participation mandate covering a much broader range of welfare recipients and has established stronger incentives to enroll welfare recipients in work-focused activities. In some respects, TANF made achieving minimum participation rates more difficult for states  particularly because of the broader mandate, the more limited range of activities that count toward participation, and the higher target rates. However, this has been moderated by the caseload reduction credit that has reduced target rates, by declining caseloads that require states to involve fewer individuals in program activities to meet the rates, and by state waivers that in some cases have temporarily narrowed the proportion of the caseload that is required to participate in program activities and allowed a broader range of activities to count toward the requirement.

Compared to JOBS, TANF has resulted in a slight overall increase in the number of welfare recipients participating in welfare-to-work activities. In FY 1996 approximately 665,000 welfare recipients participated in JOBS activities, while in FY 1998 almost 700,000 individuals participated in work or work-related activities under TANF (U.S. Department of Health and Human Services, 1999, and Administration for Children and Families, 1997). However, as discussed above, these numbers are not strictly comparable because participation is defined in different ways under the two programs. For example, individuals who were working while receiving cash assistance under JOBS are not included in this number (but they are in TANF) while in TANF some individuals participating in education and training may not count toward the rate (but they did in JOBS).

These figures also reflect the decline in the number of families receiving cash assistance. While the number of program participants is close in absolute terms, a higher proportion of the cash assistance caseload is now participating in welfare-to-work activities. The number of JOBS participants in FY 1996 represents 14 percent of the number of families on welfare (including families that were exempted from the participation requirement). Under TANF, 22 percent of all families receiving assistance (again, including families that were exempted) were involved in work or work-related activities in FY 1998.

In sum, this paper has shown that participation requirements in welfare-to-work programs are very sensitive to how they are defined as well as to outside factors such as the state of the economy and other program features, including the availability of support services and grant and earnings disregard levels. Thus, it is important to consider all these factors when comparing participation rates across states and from one program to another.